A charge to our Finance Minister
It is quite refreshing to hear President Nana Addo Dankwa Akufo-Addo admonishing his appointees on the need to protect the public purse.
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At the GRAPHIC BUSINESS, this type of admonition gladdens our hearts in many ways but more important because we have a national economy which is always cash-strapped.
Our economy hardly records surplus budget basically because our expenditure as a nation always outstrips revenue making it almost impossible to achieve very basic national needs.
Besides recording deficits, what makes our story even more telling is the persistent budget overruns which characterise national expenditure, underscoring the fact that the managers of the economy lacks the discipline to stay within approved expenditure.
We are hopeful that our new Minister of Finance, Mr Ken Ofori-Atta will lead this charge and chart a new path as far as sound fiscal policy implementation is concerned.
Ghana, indeed, has been ahead of the curve in Africa for many years. But the road has been bumpy at times, and in recent years, the economic situation in Ghana has deteriorated quite markedly.
A combination of factors explain this deterioration.They include macroeconomic policies, institutions and shocks. It was accompanied by increases in other spending and over-optimistic revenue projections. So fiscal deficits have exceeded targets in the last three years. Monetary policy has also been too accommodative sometimes.
Institutional rigidities in the public finance system made the subsequent adjustment efforts more difficult.
Widespread earmarking of revenues within the budget and large spending conducted by agencies have constrained expenditure reduction. Also, large tax exemptions made reversing revenue shortfall more difficult.
We are of the view that our priority must be to restore macroeconomic stability. This means making further efforts towards fiscal adjustment.
Also, monetary policy needs to continue to be very vigilant to improve the credibility of the central bank, bring inflation down and stabilise the local currency.
Beyond macroeconomic policies, structural reforms will be very important to improve the resilience of the economy to shocks. Structural reforms, particularly in public finance, will also be important so that gains achieved in fiscal consolidation will be maintained over the medium-term and fiscal discipline becomes more entrenched in the coming period.
It is important for the government to work hard to address fiscal and external imbalances, improve its business environment and promote opportunities for growth, all of which is key to the recovery of the country’s efforts to create jobs and kick-start growth.
